The Iron and Steel Institute of Thailand has selected two areas in Songkhla and Chanthaburi provinces to serve as case studies for setting up a long-delayed upstream steel project.

"This will be difficult, as both areas are sensitive. But that's why we want to use them for the trials," said Wikrom Vajragupta, the ISIT president.

The institute hired Consultants of Technology Co and Golden Plan to perform an in-depth study into setting up an upstream steel industry that incorporates the Industrial Estate Authority of Thailand's "eco-industrial town" concept focused on raising the living standards of surrounding communities.

The study has been completed, and three trials will be proposed in two areas of Chanthaburi's Laem Sing district on the eastern side of the Gulf of Thailand and Songkhla's Ranot district on the western side.

Mr Wikrom said the first trial would involve participation by local residents in project development and co-ordination with the government and investors.

"We need to accept the fact that in the past, industrial estate development was managed by either the private sector alone or the IEAT without any community participation. Japan, on the other hand, leaves the management process to local administrations," said Mr Wikrom.

The second trial will focus on environmental management, including implementation of protective strips and buffer zones as well as residential areas for workers.

The third trial will look at improving the quality of life, with the industrial sector contributing to a special fund that will be set up.

The communities will be asked for formal approval of the three trials and whether they need a steel smelter project.

"In reality, some may say yes to the former while turning down the latter. But even then the study would not be a waste, as it could be applied to other industries or communities wanting to use this model," said Mr Wikrom.

He admitted, however, that communities in Chanthaburi had already protested against the idea.

"Because of the protests, we may propose at the end of this month to fold all three trials into communities in Ranot," said Mr Wikrom.

Public hearings will be held in Bangkok early next month to gather comments from investors. Findings will be submitted to the government in mid-November, including a general overview of more than 10 areas around the Gulf of Thailand with the potential to adopt this model.

Mr Wikrom said a final option would be to invest abroad. The government last year received investment proposals from four big steel producers - JFE Steel Corporation and Nippon Steel of Japan, ArcelorMittal of India and Baosteel of China, all of which want to build an integrated steel smelter.

Thailand imports 200 billion baht worth of high-quality upstream steel each year. Building a new plant would cost 150 billion baht including infrastructure.